17th Mar 2018

TTIP investor court illegal, say German judges

  • EU trade commissioner Malmstrom will hold the next round of talks in Brussels on 22 February (Photo: European Commission)

German judges dealt a blow to EU-US free trade agreement talks after declaring a proposed arbitration court illegal.

The European Commission last September proposed setting up an investment tribunal court that would allow firms to challenge government decisions as part of its larger Transatlantic Trade and Investment Partnership (TTIP).

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Critics says the new court, which is intended to replace a much loathed investor-to-state dispute settlement (ISDS) system, will pressure governments into clawing back consumer protection rights and environmental standards in favour of corporate interest.

Earlier this week, the German Association of Magistrates, a Berlin-based judicial umbrella organisation, said it "sees neither a legal basis nor a need for such a court".

It says existing national courts are good enough and that efforts by the Commission to create a new court undermines jurisdictions across the Union.

"The German Magistrates Association sees no need for the establishment of a special court for investors," it states.

It says the new investor court would alter national court systems "and deprive courts of member states of their power."

The German magistrates also cast doubt on the independence of the judges in the new system as well as their appointment procedures.

Proponents, for their part, say the investment tribunal court is needed to both protect and attract foreign investment from potentially hostile governments or biased domestic courts.

'Democratic principles and public scrutiny'

The European Commission declined to comment but instead referred back to its previous stated positions.

EU trade commissioner Cecilia Malmstrom, who is heading the TTIP talks, last year said the new court would be "subject to democratic principles and public scrutiny".

The centre-right European People's Party and the centre-left Socialists & Democrats groups in the European Parliament spearheaded the new investor court last summer and backed the commission's proposal. Others, like the Greens, opposed the plan, noting businesses should not be allowed to file cases in private courts outside current legal systems.

The TTIP talks, which have been largely held in secret since 2013, aim to remove non-tariff barriers to trade.

The 12th round of talks will be held in Brussels on 22 February.

"We will only know closer to the date what topics will be discussed," said a commission spokesperson.

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